Source: AP

Source: Reuters

When this is the good news you have to wonder.

Source: Yahoo Finance

Here is a graph that shows the 5 year history of discount window borrowing:

The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. [Source: Federal Reserve]

So what did the Federal Reserve change?  The press release outlined:

"At that meeting, the Committee left its target range for the federal funds rate [unchanged] at 0 to 1/4 percent and said it anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period."

and

"The changes to the discount window facilities include Board approval of requests by the boards of directors of the 12 Federal Reserve Banks to increase the primary credit rate (generally referred to as the discount rate) from 1/2 percent to 3/4 percent."

The net effect of this is diminished, since borrowing at the Discount Window has been significantly reduced from the $400 billion dollar high to an elevated $100 billion.

This is definitely worth watching -- http://vodpod.com/watch/3021879-tegenlicht-2010-quants-de-alchemisten-van-wall-street.

The film is a series of opinions from several principles of Quant Community.  Two of those featured are Paul Wilmott and Emanual Derman.  Together they've come up with The Financial Modelers' Manifesto. Despite the homage to the Communist Manifesto, it provides some useful and comedic insight and advice, specifically the end:

The Modelers' Hippocratic Oath

~ I will remember that I didn't make the world, and it doesn't satisfy my equations.

~ Though I will use models boldly to estimate value, I will not be overly impressed by mathematics.

~ I will never sacrifice reality for elegance without explaining why I have done so.

~ Nor will I give the people who use my model false comfort about its accuracy. Instead, I will make explicit its assumptions and oversights.

~ I understand that my work may have enormous effects on society and the economy, many of them beyond my comprehension.

There are so many companies with the free business model on the web that are supported SOLELY by equity funding.  Just because someone can con another out of their money does not mean that their business model is solid.

The other phrase you hear from these self appointed geniuses is: "If Murdoch makes them pay for it, they'll just go somewhere else."  Umm, if your product (in this case news) can be produced by anyone else for free, good luck staying in business.  The Wall Street Journal actually has content that you can't get anywhere else and people (over a million) pay for it each year.

Bottom line: Just because the content that most people produce on the web has $0 value, doesn't mean that such content doesn't exist.

I’m going to summarize a great article, Health Insurance in the United States http://eh.net/encyclopedia/article/thomasson.insurance.health.us, however, I encourage you to read the article in its entirety.

The shift to employer based health insurance began during World War II and price controls that restricted employers from increasing wages to compete for labor.  Exempt from the 1942 Stabilization Act was employee insurance plans.  Therefore, employers used the plans as a way to differentiate themselves and attract desired employees that were in short supply.  In addition, the Labor Relations Board and later the Supreme Court paved the way for unions to include insurance benefits in their “negotiations” with businesses.  Finally the government made employer’s contributions to health insurance exempt from payroll tax as well as exempt from employee taxable income.

In sum, there is no magic to why employers are a conduit for employee healthcare. More to follow…

ANGEL: “So, Mr. Entrepreneur, how much money are you putting into this venture?”

ENTREPRENEUR: “I’ve spent a considerable amount of sweat equity cultivating the idea and will be working day and night to see this venture succeed.”

ANGEL: “So that’s no cash?”

ENTREPRENEUR: “Well yes, no cash.” As if I’ve called his/her mother a dirty name.

ANGEL: “Will you be paying yourself something while you toil away?” This time I’ve insulted their father’s side of the family.

ENTREPRENEUR: “Yes, some small stipend so that I can put food on the table for my family.”

I love the “food on the table”. My response will now be “Yes, for this investment I’ll be using the money I usually spend on my child’s lunch.”

I’m here to set the record straight. The after tax dollars Angels put into these ventures are a tangible manifestation of their own sweat equity that has actually been translated into value – dollars. Follow me here; the dollars represent not only hard work but hard work that was exchanged for money in excess of necessities” now used for this investment. Those dollars are not speculative they are proven value.

To review, the Angel is supposed to provide after tax dollars to start the venture. For this, the Angel’s investment is often valued on a percentage basis less than the Entrepreneurs vaunted sweat. That’s Bullshit.

Don’t get caught-up in the “mysticism” of being included in a private placement.

Usually it’s the same pitch as the guy on the corner with an outstretched hand, the difference being the “entrepreneur” is dressed better and has a longer laser printed sign.